Fiscal Federalism and Middle-Income Housing Subsidies

When only one in four low-income households receives a rent subsidy from the federal government, it seems patently unfair to spend scarce federal housing dollars to support households with higher incomes. Although moderate- and middle-income households increasingly struggle to pay their housing costs, their burdens are far less extreme. Consider that, across the country in 2013, 36 percent of low-income renter households (those earning less than 80 percent of the Area Median Income [AMI]) and 62 percent of extremely low-income renter households (those earning less than 30 percent of AMI) paid more than one-half of their incomes on rent. Meanwhile, only 2.4 percent of renters earning between 80 and 120 percent of AMI paid more than one-half of their incomes on rent (Steffen et al., 2015). Further, even when paying the same share of their incomes on rent, moderate- and middle-income households enjoy significantly higher residual incomes than their lower-income counterparts.